Thursday, May 28, 2009

The story tells the plight of Patrick Tumulty, a 54 year old male with kidney failure and a short term major medical plan.

The diagnosis was only the first shock. The second came a few weeks later, in an Aug. 5 letter from Pat's health-insurance company. For six years — since losing the last job he had that provided medical coverage — Pat had been faithfully paying premiums to Assurant Health, buying a series of six-month medical policies, one after the other, always hoping he would soon find a job that would include health coverage.

The article laments the fact that Assurant will not pay for Pat's treatment.

The author fancies herself as a bit of an expert on health care and health insurance.

When my mother, panicked, called to tell me that the insurance company was refusing to pay Pat's claims, I told her not to worry; bureaucratic mix-up, I assumed. I said I'd take care of it, bringing to bear my 15 years of experience covering health policy, sitting through endless congressional hearings on the subject and even moderating a presidential candidates' forum on the issue.

Confident of my abilities to sort this out or at least find the right person to fix the problem, I made some calls to the company. I got nowhere.

I don't know how much "hands on" the author had in helping her brother find the policy, but I do know this. The policy they bought clearly states that any condition that was diagnosed, treated or symptomatic in the 5 years prior to the application is a pre-existing condition and there is no coverage.

That's pretty straight forward.

But the author uses this as her soapbox to proclaim the health care system is broken.

Sorry. What is broken is the consumer who fails to read the details of the policy before buying.

Apparently the 15 years the author spent covering health care issues and consulting with politicians (now THAT is scary) failed to teach her even the basics about the topic.

NOTE: Due to the massive amount of spam we've been getting, we're working with the hosts of the Health Wonk Review to find an alternative to Blog Carnival. Any suggestions are most welcome (as are offers to design/implement an alternative submission widget).

Wednesday, May 27, 2009

When it comes to the relationship between healthy lifestyles and insurance costs, we tend towards ambivalence: on the one hand, there's no question that choosing healthy foods and habits is a good thing; on the other, there's scant evidence that this will dramatically reduce insurance premiums.

So of course we'll muddy the waters a bit more, with some news from United HealthCare. UHC recently emailed agents some information on the (potential) relationship of healthy choices and lower premiums. Based in part on the 2009 Employer Survey on Purchasing Value in Health Care (by Watson Wyatt), we learn that two thirds of those surveyed claim their employees' poor health choices are the "biggest challenge to maintaining affordable health care coverage."

Left unremarked in the UHC email was this little tidbit:

"51 percent of companies have a CDHP in place — nearly a 9 percent increase over last year. Enrollment rates in CDHPs are also increasing at a pace of two percentage points per year, rising to 12 percent in 2008."

That's great news for those of us who think that encouraging insureds to be more proactive, and to take a greater role in their health care and insurance, is a good idea.

Another survey, this one by Buck Consultants, found that over half of the surveyed employers intended to "actively pursue a culture of health for the future." It's not clear what that means; one presumes this would include stop-smoking programs, some kind of regular excercise incentive, that kind of thing.

The carrier even included a handy flyer that can be printed out (and distributed) which recaps some of the findings and offers helpful suggestions.

We've maintained all along that health insurance "solutions" do nothing to resolve the underlying problem of constantly increasing health care costs. And we've spent the past several years chronicling Massachusetts' (failing) efforts at forcing a government-backed plan on an unsuspecting populace.

It's not just about increasing costs, either: even though The Bay State has more docs (per capita) than any of the other 56, average wait times have burgeoned, and it's become more and more difficult to even see certain specialists (like OB-GYN's, for example). This is apparently due in large part to so many "newly insured" (on the public's dime, of course) suddenly seeking health care. It's a major "be careful what you wish for" moment, of course: when something's free (or nearly so), demand skyrockets (cf: breakfast at Denny's).

And that's the dilemna, really: when the "solution" merely addresses the symptom (cost and availability of health insurance) without regard for the underlying problem (cost and availability of health care), then there is no real solution at all.

One of the favored buzz words in the current debate of health care and how to fund it is the "Public Plan." Simply stated, this would be a gummint-run, alternative system to private insurers, much like some states already use for their employees. On its face, it seems beign enough: offering a government-sponsored plan in competition with "regular" insurers would force the latter toward ever more competitive price points, while maintaining our choice of physicians and level of care.

I recently had the pleasure of "sitting in" (virtually, of course) on a panel discussion of this topic sponsored by the Heritage and New America Foundations and the Lewin Group. The panelists included representatives from all three "think tanks:" Stuart Butler (Heritage's VP of Domestic & Economic Policies), Len Nichols (New America's Director of Health Policy) and Lewin's John Sheils (Senior VP). Julie Appleby, Senior Correspondent for Kaiser Health News, moderated.

In this first of a two-part post, I'll recap some of the points made by the various panelists; in Part 2, we'll take a look "under the hood" to see what this plan is really all about.

John Sheils took point, explaining that the whole Public Plan (PP) idea is modeled on Medicare [ed: which is itself set to implode in less than 10 years.] The plan sets payment rates for providers much as Medicare does. Mr Sheils believes that Medicare currently pays about 68% of what private insurers pay for hospital expenses, and about 81% of private insurance rates for physicians.

He went on to explain that, unlike commercial insurance plans, Medicare doesn't require pre-certification for various procedures. He also stated that private insurers' admin expenses currently top out at about 13.4% [ed: we've long since debunked this particular canard, but the nature of the call was such that I could only listen, not respond]. Mr Sheils than talked about projected pricing levels for the PP.

Mr Sheils then explained that there are really two scenarios of how a PP could be implemented: a) for individuals (including the self-employed) and small firms or b) for all employers. He then went on to explain how each of these might work out for providers, but never really addressed the conundrum of "price" vs "cost (a consistent IB theme).

We then heard from Len Nichols, who opened by expressing concern over imposing Medicare pricing on all providers and care. The fundamental problem, he said, was that Medicare generally pays below cost [ed: no kidding?!]. He then blurted out that "people don't trust private insurance," but failed to provide any evidence for this assertion. Mr Nichols then picked up on the various states' plans, which are based on ERISA, which allegedly provide a "level playing field" because they must compete based on payment. Unfortunately, he failed to address the underlying problem of cost control, but we'll discuss this in Part 2.

Finally, we heard from Stuart Butler, who began by asking how each model would likely play out over time. He was particularly concerned over what he called "the down the road,"and wondered if government should manage health care. He said that the PPO option supposedly leveled the playing field, but that it is inherently unstable.

Mr Butler then turned to what he felt was a classic case of "bait-and-switch:" the Feds "wall of separation between the market and the Public Option couldn't hold," that Congress would eventually intervene [ed: cf: mortgages, cars], and that there's an inherent and insurmountable conflict of interest because, as he put it, "the government assumes the roles of both umpire and team manager."

He expressed further concern that what the electorate heard wasn't really what was said: that if one is already insured, for example, that wouldn't change. Of course that's not true, but we often hear what we want to hear. He also said that cost-shifting would increase the costs of private insurance [ed: something we've documented here at IB as regards Medicare]. He feared that the government would "cheat" later, and asked if the public was ready for a health system run by the same folks who brought us the Post Office, the DMV and the IRS. His greatest concern was that once we open the doors to congressional "oversight" there would be no "level playing field" as they required more and more benefits at lower and lower costs. He also dismissed the notion that one could argue that state and federal are comparable: no states are as powerful as the Feds. He argued that the Public Plan would control costs by controlling how much is paid.

In Part 2, we dissect what was said, and explain why the PP option isn't really about choice at all, but simply another name for government-run health care.

Saturday, May 23, 2009

As we've noted before, we don't "do" paid advertising here at IB. This was a conscious decision I made when we began: I believed then, as I believe now, that having paid ("click through") advertising would present potential conflicts of interest, and I really had no stomach for that. Over the years, we've received several offers of products or services for review, and have taken advantage of exactly one (our one and only book review). I also received an (unsolicited) package from the Minnesota Blue Cross touting their (then new) transparency efforts.

Of course, there have been other offers, but we've shied away from them. Even my review of iTraige was based on my having paid full retail (almost $2!) for the privilege.

On the one hand, I'm skeptical that the FTC has the manpower to actually police, let alone enforce, any such "guidelines." And I'm not really sure that they have the authority to do so (although I'd welcome any light that may be shed on that by our more legally astute readers). On the other, I certainly think that, as readers and consumers, we're entitled to know whether or not a given blogger has a vested interest in "pushing" a particular product or service. I don't have any particular issue with bloggers posting glowing reviews, but if credibility is our sole asset, it seems to me that how we obtained that which is being reviewed is relevant.

The doc at M.D.O.D. had a pretty good response for Hugh Hewitt, and he almost convinces me – but no.

Let’s start by asking: was this doc engaged in health care policy leadership during the 40 years that preceded EMTALA? I'd guess not. Were most other physicians engaged? No.

I believe that physicians, by their failure to effectively assert leadership in health care policy, allowed what this doc calls “professional arguers” to gain control of it. I also believe that, up to just a few years ago, physicians were mostly content with this arrangement because they were left alone to charge fee-for-service based on U & C.

Let’s now ask whether the government suddenly overthrew private medicine? Or did the government come in on little cats' feet, step by step, year by year, always with a promise of doing something good for the people? Yeah, you know the answer. And so gradually government insurance types - and private insurance types for that matter – filled the vacuum of health care policy and administrative control that was being ignored by physicians. Nature truly does abhor a vacuum.

And there are consequences for inaction.

Physicians find they don’t like taking policy direction from the administrators who filled the vacuum that physicians largely created.

So yes, I think it’s an excuse - not to mention a fig leaf over the past - for this doc now to suggest that he and other physicians were simply swept along as passive victims of professional arguers, until one day they were ambushed by EMTALA - the final outrage. And after wandering around in their wilderness of inaction for 40 years, this doc now suggests that physicians believe it’s too late for action. Too late! Resistance is futile! So the better course is to “muddle through to the inevitable” which I gather means toss in the sponge and take the John Galt exit off the Hippocratic Highway. Yeah, sounds like a pity-party to me.

I have hoped and advocated for years for physician leadership in health care policy. I still think that is what the country needs. I hope for it – but encountering continual physician excuses for physician inaction makes me doubt it will ever happen.

And so we will get our government health care controlled by politicians and so docs will slowly turn into government drones and so the government will declare a great victory for the people. And the people will rejoice. Remember that, in the end, Winston Smith decided that he loved Big Brother.

Oh yeah, and there will be political patronage jobs in health care until the end of time.

Thursday, May 21, 2009

A few months ago, we raised eyebrows (and hackles) with our assertion that physicians are, as a group, stupid. Thanks to Blogfather Hugh Hewitt, I found this post, by a "semi-young, semi-burned out Emergency Physician," that lays the blame squarely on EMTALA:

Wednesday, May 20, 2009

Seems the idea of taxing adult beverages to pay for health care has been tried before. Maine passed a law last year to save Dirigo (taxpayer funded health insurance for the poor).

Gov. John Baldacci said Wednesday that he was proud to sign a new law that will use taxes on beer, wine and soda to provide a stable source of funding for Dirigo Health, the program that includes affordable health coverage for some Mainers.

In a State House Cabinet Room signing ceremony, Baldacci said Dirigo is essential to helping working families and small businesses that need health insurance.

“This is about people who need help,” he said. “It makes a difference in people’s lives.”

The new law increases the excise tax on large beer and wine manufacturers, and puts a new tax on syrup used to make soft drinks. It also takes $5 million from the state’s tobacco settlement money and borrows $3.6 million from the state General Fund.

In addition, it assesses a 1.8 percent surcharge on paid insurance claims.

The law will provide Dirigo with $49.6 million next year, an amount that increases to $58 million in future years.

Sounds like a plan. Only one problem . . .

The Repeal the Dirigo TaxReferendum was a veto referendum question that appeared on the November 4, 2008 ballot in Maine as an attempt to overturn the new Dirigo Tax bill that had been approved by the Maine state legislature and signed by Maine's governor. The November 4 vote succeeded at overturning the tax.

Looks like the pitchfork and torch crowd had something to say about it.

It is expected the price of cars so equipped will rise by $1300 or so. The cost of electric vehicles are even more, starting around $35,000 and going up from there.

But will this move impact health and safety?

Some think so.

The government says no tradeoff exists, because nothing in the new rules would force automakers to sell more small cars, which are more dangerous in crashes than larger ones. But some safety experts think otherwise.

"The deadlines are so tight that downsizing will be a tempting compliance strategy" for automakers, says John Graham, the former rulemaking chief in the Office of Management and Budget.

More serious injury or death is acceptable to the folks in Washington?

It raises the risk that cash-strapped automakers will take the fastest and cheapest route to building more fuel-efficient vehicles: Make them smaller and lighter. Further, as General Motors and Chrysler rely on federal bailout money for survival, they are ill-positioned — and disinclined — to fight proposals that some say may not be just dangerously costly, but simply dangerous.

Why waste a good crisis? Kick them when they are down.

Just another example that big government knows what is best, even if it means more carnage.

First the good news: Sen Kennedy's brain cancer appears to be in remission. Regardless of how one views his politics (let alone lifestyle), it's always a blessing when folks are able to beat back their illness.

Now the bad: Under the health care plan that Sen Kennedy and his colleagues would impose on us, such an outcome would be unlikely. That's because the centerpiece of their party's plan is the use of cost/benefit analyses, which bodes ill for the sickest among us.

As we've seen time and again, those most at risk in such a system are the ones least likely to be approved for treatment. Of course, if the idea is to ration health care, this makes sense; if you're dying, there's probably no real incentive to bother getting out to vote.

Something to consider if you're leaning toward supporting such a scheme.

This was a problem for folks who use their accounts on a "revolving door" method (waiting for an actual expense before funding the account). That dilemna is now resolved, at least for those in Utah.

The second item is news that 2010 will see increases in both the amount one may contribute to the HSA and the minimum deductible required for a plan to be HSA-compliant. For singles, the max contribution will go to $3050 (an increase of $50, or about 2%); for families, it'll be $6150 (up $200, or a bit over 3%).

On the other hand, the minimum deductible for single cover increases from $1150 to $1200 for singles (over 4%), while the minimum family deductible goes to $2400 (also about 4%). While these numbers aren't large, they are significant: the percentage increase in minimum deductibles is almost twice that for tax-advantaged contributions to help pay them. That's disturbing.

PresBO want's to change health care (but what he really wants is to change the way health care is funded) and Congress is eager to play fetch. But the way they are going about it is wrong in so many ways.

We have touched on a few issues already, but the WSJ Health Blog summarizes some we have touched on an more in a concise manner.

In addition to taxing employer provided health insurance, tobacco and soda pop, Congress in Medusa like fashion is considering everything fair game to satisfy their gluttony for revenue.

HSA's and FSA's give employees and individuals a CHOICE in the way they spend their health care dollars. When you give your money to the insurance carrier for plans that are loaded up with copay's, the carrier decides how you should spend your money.

Now Congress wants to limit how much you can put in your HSA or FSA because they feel you are sheltering too much income from taxation. They want to limit your choices and penalize you for being an informed consumer. In other words, you are not smart enough to make wise choices and they want to tax as much of your earned income as possible to pay for revamping health care funding.

If you are among the 30% of taxpayers who itemize their deductions, watch out.

People currently can take itemized deductions for qualified expenses exceeding 7.5% of their adjusted gross income. Options include raising the 7.5% floor or eliminating the deduction altogether.

Most who itemize are able to do so because of home ownership and the interest credit against income. But some are able to itemize, at least in part, due to high medical bills relative to their income.

If Congress get's their way, those who have the misfortune of a serious illness or accident and actually pay their bills (rather than stiffing the providers) will be further penalized with excessive taxation.

Talk about kicking someone when they are down . . .

Here is something most folks probably don't know. Many students and government workers don't pay FICA taxes to fund Medicare, Medicaid and Social Security. That free ride may be over.

Current law exempts students employed by a college or university from contributing money for Medicare and Social Security through payroll taxes. Teaching hospitals have applied this exception to medical residents receiving stipends. The proposal would be to narrow the definition of “school” and more clearly describe student employment.

Certain state and local governments do not currently pay payroll taxes for Medicare.

Students are people who are trying to become more productive members of society, earn more and as a result of their effort, pay more taxes than they would without an education. Penalizing a desire to improve your lot in life seems very short sighted.

Not for profit hospitals get tax breaks. The trade off is, they are required to provide a specified level of free care to those who cannot pay.

Hospitals that don’t maintain a minimum level of charitable activity, limit charges to the uninsured, indigent patients and limit aggressive collection actions would be subject to an excise tax.

Many hospitals, particularly those who cater to the poor and uninsured, are in danger of closing their doors. Uncompensated care is a major problem that needs to be addressed from a business perspective . . . something few in Congress understand.

Many of the uninsured are that way by choice, not because they lack the funds to pay for health insurance. When they are sick or injured they go to the charity hospital because they feel they will not be asked to pay for services.

In other words, they feel they are entitled to steal medical services and do so with impunity.

This kind of behavior does not need to be condoned or rewarded. If they have assets to pay for their care those assets should be subject to being seized by the medical providers. Some would have you believe that hospitals are taking a shotgun approach, using Tony Soprano tactics to collect from anyone and everyone.

Nothing could be further from the truth.

They spend a great deal of time and money to locate people with the ability to pay and pretty much ignore those who don't.

Congress has become Jabba the Hut with an insatiable appetite for revenue. This mentality of robbing those who are productive members of society to pay for health care reform is just wrong.

It's true that unhealthy behaviors affect the government's cost e.g. Medicaid; CHIP; benefits for employees of the City of NY; etc. That means these behaviors raise the tax burden. Hmmm, so as long as we're raising taxes, the thinking goes, why not instead raise taxes to finance "programs" designed to eliminate these behaviors? This motive is couched in benevolence - after all, it's "for your own good," is it not?

And when the government is financing all of "health care", just imagine all your behaviors it can think of to regulate, to save taxpayer money, "for your own good."

If this topic piques your interest I also highly recommend this short story - if you can find it. Hint: it seems like SF, but is actually a parable of a possible future. Certain characters in this story are truly trying to bring “wellness” to humankind. Their mission is benevolent and they carry it out out with integrity. Yet the result is . . . well, you read it. Worth your time - if you can find it.

Saturday, May 16, 2009

ABC Widgets doesn't just watch all its employees toddle off to its competitors. It also hires new employees.

If "wellness" were more prevalent, those new employees would bring with them whatever health improvements were gained from their previous employer's "wellness program". So ABC Widgets, by offering a wellness program to its employees, would not necessarily be improving its competitor's bottom line. If, that is, "wellness" were more prevalent.

Well then, why isn't "wellness" more prevalent?

And must "wellness" be a "program" that you pay someone to "provide" for you?

I think wellness is health care. The so-called health care debate is not really about health care, it is about medical care. That may be a fine point, and so long as the discussion is really about medical care, perhaps no harm is done. But I think when the attention turns to wellness the distinction must be drawn between health care and medical care. And that is when the similarity (I would say equivalence) of health care and wellness becomes apparent.

Whichever you prefer to call it, the terms wellness and health care include what we can do for ourselves, to keep ourselves . . . healthy.

We can exercise (free). We can get adequate sleep (free). We can steer clear of substance abuse of all kinds (free). We can keep a reasonable diet (free). We can always wash our hands (free). We can hold it down to 85 on the Interstate (free). We can stop smoking or never start (better than free). To a great extent we already have free health care in the U.S.

Why, I wonder, aren’t more people taking advantage of free health care? Free is affordable. What's the problem?

Maybe we're just too busy to do these free things for ourselves. Maybe we're too occupied debating the need for someone to bring us a "program" to "deliver" a lot of "health care" from "providers" who supply it at "affordable" cost. Sounds to me like the present debate.

And, maybe, we are distracted because the present debate is being conducted in terms that are unclear, inconsistent and confusing. Examples? (1) Health care and medical care are the same; (2) “affordable coverage” can somehow reduce the cost of medical care instead of the other way around; (3) wellness is a program that should be included in an insurance plan. There are other examples.

Friday, May 15, 2009

Earlier this week, both Boband I weighed in on the president's proposed health care "plans" (such as they are), with particular emphasis on how the health care and health insurance industries reacted to his initiatives.

Unfortunately, The O-man (to borrow a phrase from Bob), may have significantly overstated his case:

Readers may recall that the health care industry had (allegedly) promised some $2 trillion in cuts over the next decade; according to The Gray Lady, "Health care leaders ... say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts."

As the song goes, "You say tomato, I say hippopotamus."

In point of fact, the American Hospital Association (about whose gloom-and-doom outlook we reported earlier this month) specifically contradicted the administration, adding that the organization "did not commit to support the ‘Obama health plan’ or budget. No such reform plan exists at this time.”

Is this train wreck being derailed?

On the health care financing side of the equation, a spokescritter for America’s Health Insurance Plans (an organization which itself is not exactly the brightest light in the harbor) clarified that "savings would “ramp up” gradually as the growth of health spending slowed." Now where have we heard that tune before? Oh yeah, right here at IB.

Meanwhile, our esteemed legislators are busy hunting for "savings that could be certified by the Congressional Budget Office, the official scorekeeper, so the money could be used to pay for coverage of the uninsured."

Interesting metaphor: is this all just a game to them?

If it is, health care providers aren't in the mood to play: "Mr. Pollack[AHA's Executive VP] assured hospital executives that the promised savings “are not subject to rigid ‘scoring’ rules used by the Congressional Budget Office.”

New York already has some of the highest premiums in the country thanks to government meddling. Residents of New York can buy health insurance without medical underwriting. This means folks who are healthy get the same kind of offer as those who are really sick.

New York also has community rating which is a fancy way of saying everyone in a particular area pays the same for health insurance without regard to any pre-existing health conditions. In other words, healthy people pay the same as sick people.

And let's not forget that because of these mandates, only a handful of carriers even want to write business in that state. Less competition means fewer choices.

All of this adds up to some very high premiums.

Now Patterson want's to make it worse.

"This is basically a bill that seeks to impose much greater regulation of health insurance premiums," she said. "It's basically exerting price controls on health care. It ignores the underlying factors that are responsible for an insurance premium. It would only regulate the cost of premiums without regulating the cost of providers, hospital cost."

Greater regulation on premiums means more carriers will simply withdraw from the market, resulting in even higher premiums.

Of New York's uninsured, nearly one in three is between the ages of 19 and 29. Paterson's proposal would allow families to cover children up to age 29 under insurance provided by their employer

If children are still living at home at age 29 they are never going to leave. At some point it is time to cut the apron strings and suggest they start acting like an adult. Covering children under an employer plan is usually much more costly (at least in Georgia as well as most other states) than purchasing individual coverage in the open market.

Under the proposal, families would pay the premiums instead of employers, but it would cost less under group policies than if the young adult took out an individual policy.

Maybe so in NY, but not so in most states.

I have quite a few clients who have taken their children off an employer plan and put them on individual policies. I have children as young as 2 on policies that are half the cost of covering them under their parents group insurance plan.

The final proposal in Paterson's package would attack managed care to reduce bureaucracy that stands in the way of care and cut down on inappropriately delayed or denied claims. If an insurance company fails to meet a deadline for reviewing a claim, the proposal would require the claim to be approved.

The plan would also reduce the time insurance companies have to pay doctors and hospitals to 15 days instead of 45 days.

These may seem noble but consider this. If claims are paid just to meet an artificial time limit, and there is no other justification for paying the claim, the result is higher premiums.

Managed care and giving carriers time to adequately review claims reduces the number of superfluous claims which hold down premiums. Of course the flip side is for carriers to increase staff to process claims much quicker. Increased staff means higher costs which results in higher premiums.

Providers have regulated reimbursement and Medicaid and Medicare have built in ceilings, so when you have that, but you have one sector that is exclusively free market, you take the air out of the balloon."

If New Yorkers think health insurance is costly now, just wait until Patterson and company get through with it.

The days of affordable health insurance in Georgia and elsewhere as well may be doomed. If Washington get's their way, look for the cost of funding health care reform to rise significantly, not drop. Some of the ideas floated around include the following.

Require medical providers to switch to EMR (electronic medical records). The projected savings are overstated and the cost is not fully revealed. Some funds are allocated as part of the so-called stimulus bill, but those are tax dollars. Remember, the federal government doesn't have any money except what they take from us.

Even those dollars are not enough to fund the transition to EMR, the rest will have to come from the medical providers. And where will they get those dollars?

From us in the form of higher fees for medical services which translate into higher health insurance premiums.

We have also learned Congress is frantically looking for new tax sources. They have already increased tobacco taxes to fund increases in Peachcare (SCHIP) and now they are back for round two. The so-called sin taxes, increased taxes on beer, tobacco and soda, are among items on the table.

U.S. House Democrats are weighing an expansion of the government's role in health care that would include a mandate that employers provide coverage to all full- time workers or pay a percentage of their payroll to the Treasury.

This can impact businesses, their employees and customers in several ways. Businesses that currently do not offer health insurance will have to do so but how will they fund it?

One way is to lay off employees to offset the increased costs or reduce hours. An employee who was full time and now has fewer hours as a result of government intervention not only takes home less money but by being reclassified as part time will become ineligible for health insurance benefits.

Another way is to increase the cost of goods & services sold to their customer base. Higher prices paid by you and me translates into a hidden tax.

Congress' tax-writing committees would decide whether higher taxes are part of the overhaul. One idea under consideration is to tax part of employees' health benefits, which aren't subject to income taxes now.

This is both a hidden tax and an explicit tax.

If you receive benefits from your employer now, the portion paid by the employer is not included in payroll and does not appear as a taxable item on your paystub. Since they are not counted as payroll, it also means your employer does not pay FICA tax, SUTA, FUTA or workers comp premiums on those amounts.

If Congress decides to tax those benefits, you take home less money, the employer pays more taxes and higher workers comp premiums and passes those along to customerss.

And let's not overlook the so-called government subsidies so low income people can afford health care and health insurance.

Government subsidies for coverage would be available to some consumers. Individuals with incomes of as much as $88,200 for a family of four would get aid, on a sliding scale, and their annual out-of-pocket health expenses would be capped.

Where do government subsidies come from?

You and me in the form of higher taxes.

And in what world is $88k considered low income?

Just more stupid government tricks played on folks who think everything from the government is free.

Drug manufacturer Pfizer, maker of popular drugs like Lipitor and Viagra, has announced it will provide 70 of their most popular drugs at no charge to people who have lost jobs and health insurance since 1/1/2009.

The 70-plus drugs covered in the program include several diabetes drugs and some of Pfizer's top money makers, from cholesterol fighter Lipitor and painkiller Celebrex to fibromyalgia treatment Lyrica and Viagra for impotence. Drugs from several other popular classes such as antibiotics, antidepressants, antifungal treatments, heart mediations, contraceptives and smoking cessation products also are included. Cheaper generic versions are available for quite a few of the drugs.

This is a very generous offer from an industry that quite often takes it on the chin. Because of this move, you can lower your cholesterol and have sex while you are waiting on the next job to come along.

I would prefer to have a link to the study for our readers to check the results against the conclusions, but have been unable to find one. I did contact the media folks at MMO, who directed me to the Research Center's Dr Dee Eddington. I emailed Dr E requesting either a link or a copy of the findings, but he has not yet responded. I'll update this post if/when I receive a reply.

According to the newsletter, MMo has been tracking certain employee health metrics, beginning in 2003. These include "employee health and fitness. Wellness for Life programs include the Rewards Program, the Health Risk Assessment, on-site health screenings, participation in Weight Watchers and online Healthy Living Programs."

In 2008, they turned their data over to Dr E and his team for analysis. The findings seem pretty optimistic:

■ The number of employees at high and medium risk of developing chronic disease decreased, while the number of employees at low risk increased by fi ve percent. Lowering the number of risk factors that lead to disease means employees are getting healthier.

■ The number of employees at high risk for chronic disease associated with a low level of physical activity decreased by seven percent. In fact, in 2008 over half of MMO’s employees made use of the Wellness Center or their own community fitness center.

■ Medical costs increased less year-over-year for employees who participated in Wellness for Life activities compared to non-participants. The increase in medical costs was $268 less for employees who participated in wellness programs versus those who did not.

Now, I'm generally reluctant to even write about these kinds of things because they lack corroboration. But I think the subject's important enough to at least report, and will leave its credibility to the judgment of our readers. If true, this may indicate that such programs, if properly implemented and incentivized, show promise in reducing health care utilization. Larger groups, which are more likely to be self-funded, may even see some health insurance savings.

From a broader perspective, this could have positive effects on insurance rates in general (although they'll likely be subtle and broad-based): if it's true that health care costs drive health insurance costs (and we've demonstrated that they do), then lowering the cost of care should have some mitigating effect on rates.

Time will tell.

Exit question: were stop-smoking prescription meds included in any of the "Wellness for Life" programs and, if so, were they helpful? Further question: if they were included, and helpful, will they be added to the covered rx list?

Wednesday, May 13, 2009

Regardless of what you call them, the folks in Washington want party animals to pay for health insurance for those who are currently uninsured.

On Tuesday, the Senate Finance Committee peeked into vending machines and liquor stores, company payrolls and health savings accounts, looking for a mix of tax increases and spending cuts as a way to pay for a health overhaul - which could cost more than $1.5 trillion over 10 years.

The same folks who have run Medicare and Medicaid into the ground now want to pick your pocket to pay for health insurance for the rest of the population. Isn't that special?

There appeared to be a bubble of support among the experts for taxing bad behavior, including a $2 tax on a pack of cigarettes and a higher excise tax on alcohol.

But soda and sugary drinks found a friend Tuesday in Sen. Chuck Grassley (R-Iowa), the ranking member on the Finance Committee.

Is Grassley a Coke guy or Pepsi guy?

Still, it's easy to see why the bad-habits tax was so tempting: Taxing tobacco, junk foods and alcohol could raise $600 billion over 10 years.

Of course that assumes folks keep smoking, eating and drinking at the same rate as now. At least when it comes to tobacco, as the price has increased over the years the number of smokers have declined.

For the good of the country, Congress wants to promote an unhealthy lifestyle.

And what is it about taxing tobacco to pay for health insurance any way? Back in February Obama signed a bill to expand SCHIP (Peachcare in Georgia) which is funded at least in part by an increased tobacco tax.

If we posit that an "overhaul" of how we deliver and pay for health care is going to cost some major moola (and it will), then the question "from whence will it come" becomes terribly important. As we recently noted, one proposal puts the onus on providers, in an effort (however misguided) to put the brakes on the cost of delivering health care.

The Morningstar piece reports that carriers use "special rules when determining how much to deduct for dividends received on investments in common stock. The White House is proposing to further restrict those deductions." So restricting deductions is supposed to generate income? Ooookay. The reality, of course, is that the affected carriers' increased cost of doing business will simply be passed along to the consumer. Great idea in a tanking economy.

The article goes on to say that the O-Man is looking to do away with "some interest expense related to life insurance [that] companies take out on "key personnel," which under current rules may be deducted." It's not clear where that comes from: so-called "key man policies" aren't generally deductible, and we've already witnessed the demise of COLI.

Here's the thing: for most people, the nature of these proposals might seem, well, unimportant. But they'll have a very real impact on the cost of insurance, and on most other industries' bottom lines and, hence, our pocketbooks.

[ed: Ah, the dangers of waiting. I actually wrote this post yesterday (Tuesday) but decided to "sandbag" it for today (Wednesday). In case you missed it, however, Bob has an excellent take on the same story, with a bit of a different spin.]

Not an unlikely consequence if the Universal Care folks get their way. After all, it's likely that the same (kind of) folks who administer Social Security would be in charge of our health care:

Tuesday, May 12, 2009

Millions fewer people are working and paying the taxes that support the programs; yet health care costs are continuing to soar, millions of baby boomers have begun receiving Social Security retirement benefits, and Americans are living longer.

Medicare expenses are now expected to surpass Social Security’s in 2028.

Did you catch that?

The cost of running Medicare is expected to surpass the cost of Social Security in less than 20 years.

The report comes a day after President Obama embraced a pledge from health-care providers to slow the increase in their costs over the coming decade.

Bad timing.

O-man wants to expand government health care and they can't even manage what they have now. Let me remind you: Medicare is slightly over 40 years old and the folks in Congress have already broken it.

Blue Cross started in 1939. Kaiser Permanente started in the 1930's and became available to the public in 1945.

Both are solvent and have never taken a dime of taxpayer money.

Am I missing something?

“Correcting the financial imbalance for the H.I. Trust Fund — even in the short-range alone — will require substantial changes to program income and/or expenditures,” it says.

The trustees project adequate funding for a separate Medicare trust fund that pays doctors’ bills and other outpatient expenses, known as Part B. But it cautions that about one-fourth of Part B enrollees face “unusually large” premium increases in the next two years.

The standard Part B premium has already increased by 64 percent in the last five years.

That's part of the problem with how we currently finance health care: there are so many (expensive) mandated insurance benefits that it's almost a challenge to spend them all. Mental health parity mandates make such meds more accessible and affordable. Now, I'm all for affordability - to a point. That point is where folks take a look at the low cost of care (since someone else is ostensibly paying for it), and that leads to over-utilization and hence, higher rates.

This part's scary:

"[Researchers] said 73 percent more adults and 50 percent more children are using drugs to treat mental illness than in 1996."

Are there really half again as many pyschotic/neurotic kids now than a scant 13 years ago? Should so many of our progeny be on potentially dangerous mood-altering drugs? I don't know (I'm not a doc), but that's certainly a valid - and important - question.

So why aren't we asking it?

The adult side of the equation isn't much better: "Among adults over 65, use of so-called psychotropic drugs — which include antidepressants, antipsychotics and Alzheimer's medicines — doubled between 1996 and 2006."

I can see where the new Alzheimer's meds are critical (regular readers know why), but are there really that many depressed seniors? Maybe, but then oughtn't we be asking why?

Of course, when all you have is a hammer, a lot of medical problems look like nails:

"... expanded drug coverage under Medicare, the federal insurance program for the elderly, and the State Children's Health Insurance Program for poor children, helped make such drugs more affordable."

Fellow wonk David Harlow is hosting this week's edition of the Blawg (law blog) Review, featuring a roundup of posts about the President's first 100 days in office. Lots to read, and lots of food for thought (although some may give you indigestion).

For some 4 and a half years, IB's most significant and oft-repeated message has been that health care costs drive health insurance costs. Finally, it appears that someone has listened, but whether or not it's too little or too late remains to be seen:

That translates to an average of $200 billion per year, which is a non-trivial amount. Is it enough? Good question. A better one would be: and from where would these cuts come? Providers are already screaming about reduced reimbursements from both Medicare and insurers. The reality is that this seems both irresponsible and unlikely.

How's that, you ask?

Well, let's deal with the latter:

"The groups concede that their prices are not going down, they are merely slowing the rate of growth. But economists say the move would create breathing room to help provide health insurance to an estimated 50 million Americans who now go without it. "

Kudos to the economists who seem to "get" that health insurance costs are driven, to a large extent, by health care costs. Raspberries, however, to the folks who think that merely slowing the rate of growth (by how much is left unspecified) will significantly impact the problem. Yes, it's a step in the right direction, but until there's a push for more personal responsibility (and accountability) in both the delivery and financing of health care, we're merely slowing down, not changing direction.

The irresponsible part is neatly summed up about halfway through the Fox piece:

"There's no detail on how the savings pledge would be enforced. And, critically, the promised savings in private health care costs would accrue to society as a whole, not just the federal government. That's a crucial distinction because specific federal savings are needed to help pay for the cost of expanding coverage."

If we posit that health care spending will slow, generating enough funds to attain "universal coverage," who's responsible for the "universal" part? It certainly implies that there will be some kind of mandate requiring everyone to buy insurance, whether they want to or not. Does this mean that carriers will be forced to issue coverage on everyone? We've seen how well that works: in every instance, the cost of health insurance skyrocketed. Where are the (alleged) savings then?

Why is it that we see no concrete insurance policy criteria? How about we delete some (maybe even most) of the expensive mandated benefits, and increase deductibles? And if we must require certain benefits, how about some that benefit everyone, not just a politically-connected few? Preventive care benefits, for example, can help to cut costs over time.

As we've seen time and again, there seems to be no move to address the underlying premise: when someone else is paying for our care, money and responsibility are no object. How about we take a look in the mirror, instead of at Washington?